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December 16, 2017
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Customization to prompt changes in pharma supply chains

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Four approaches to supply chain design will provide a source of market differentiation for pharmaceutical manufacturers, says a new report.

The advent of more customized medical products and services will require radical changes in pharmaceutical companies' supply chains, according to a new report from PriceWaterhouseCoopers LLP called Supplying the Future: Which path will you take?

The study's authors predict that pharmaceutical supply chains will undergo three key changes over the next decade. First, supply chains will become fragmented with different models for different product types and patient segments. Second, supply chain design will become a way for companies to differentiate themselves as well as a source of economic value. And finally, pharmaceutical supply chains will become twoway streets, with information flowing upstream driving the downstream flow of products and services.

In addition, the report said, pharmaceutical makers would likely restructure their supply chains in four ways, depending on the makeup of their product portfolio:

Scenario 1: Companies that concentrate on specialized therapies might exit from manufacturing and outsource everything from production to distribution to a network of integrated supply chain partners.

Scenario 2: Companies might position themselves as service innovators, building supply chains that are capable of manufacturing and distributing complex treatments as well as managing multiple suppliers.

Scenario 3: Mass-market manufacturers that make generic medicines might position themselves as high-volume, low-cost providers, borrowing lessons in lean manufacturing, strategic pricing, and inventory management from the consumer products industry.

Scenario 4: Mass-market manufacturers of pharmaceuticals might turn their supply chains into profit centers that combine economic manufacturing and distribution of satellite services, such as direct-to-patient delivery, secondary packaging, or distribution to hospitals and pharmacies.

The full report can be downloaded from PricewaterhouseCooper's website.

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